Monthly Archives: August 2011

Strata networking a changing face

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There was a time when this meant going to a strata management industry conference and telling lies to your competitors about how many lots you manage and how much you charge per lot. It means something very different today.

Strata networking is about consumers being online in search of good information and recommendations about where to access goods and services. From simple referral/directory type sites maintained by strata managers to forums and blogs and everything in between – it seems everyone in strata is taking to the airways to talk about their needs.

A particular challenge confronts the industry when a strata community begins to seek out a forum for communication internally. This is happening more than you think. Frustrated by an inability to get data about who owns lots in their building or complex – owners are turning to Facebook and Google sites to create pages for themselves.

While not openly discussed, managers have benefited for years from the difficulties associated with owners getting in touch with each other and engaging in a bit of ‘group think’. Those days are fast disappearing and smart managers are starting to think about how they embrace transparency and provide ways and means for people to form community in a new way via ‘strata’ networking sites.

A paradigm shift is on in strata management; from ‘divide and conquer’ thinking to ‘connect and serve’. The new power for strata managers will come from facilitating discussions of a web based community of owners and harnessing the information from this source. The question is ; who will be Mark Zuckerberg ?

Posted by Michael Teys

Is it just a post GFC thing

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Is it just a post GFC thing, or have we all decided that we are no longer prepared to pay for leadership?

The usual rush of November AGMs for our listed companies has concluded with shareholder voting overwhelmingly against remuneration packages for senior executives and directors.

Nowhere is the push against senior management pay so overt as in the United States in the finance and banking sector. Calls for government intervention are loud and clear.

And in strata land where we work, the story is no different. Everyone knows the price sensitivity of strata management fees but in this last week I have seen a case of the humble honorarium go horribly wrong.

An honorarium is a token fee paid to volunteers for a job well done. Usually designed to reimburse out of pocket expenses associated with doing a job, some owners corporations are using such payments, as a basis to attract and keep in house talent to do a job that outsourced would cost much more.

The logic and value of these payments for owners corporations and bodies corporate are indisputable, but for some reason they just don’t work. The payments even though sanctioned by a general meeting just leave a sour taste in the mouths of owners and those who take the payment more often than not regret they did and leave active service feeling bitter and unloved.

As volunteerism dies as we are seeing it do, and as government places more and more regulatory burdens on volunteers (just look at Queensland’s unbelievably complicated new pool fence laws for an example), it is inevitable that the pay scale for strata management must change. But more pay for committees and managers doing things the way its done now does not seem to be happening.

Maybe the answer is abdication not delegation. Perhaps we get to a stage where committees say this is too hard and pay someone to make the decisions rather than advise them what they should be doing. Worth thinking about because the current system is not working for anyone.

Ethics and management rights a contradiction in terms

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A lecturer once taught me that ethics was about the difference between right and right.

She thought the difference between right and wrong was comparatively easy for most people but when both options before you are legally right, acting ethically means choosing the one option that is most right for the person you serve.

In building management, or management rights, as the industry is known in Queensland, this issue raises it head everyday. The onsite manager works for the body corporate as caretakers and, at the same time themselves as letting agents. They have statutory duties to act in the best interests of the owners and to be honest and fair and everyday they have to make choices, large and small between these conflicting interests.

A serious question of ethics arises when the resident manager applies to the body corporate for an extension to the long-term contracts for caretaking and letting. These contracts can run for up to 25 years and are worth millions of dollars to the holders who buy and sell these rights like pork belly futures.

In the wrong hands these long-term contracts can seriously devalue property and disadvantage owners simply trying to get fair value for money from a contractor they are lumbered with for decades – imagine not having the right to sack your pool cleaner for 25 years!

The law allows for an incumbent manager to ask for an extension but the law also says the manager must always act in the best interests of the owners. The law does not specifically say that in applying for an extension to the rights the manager should advise the owners to get independent legal and commercial advice about the request they have made, but does this make it right that no such advice should be given?

In these situations owners are lambs to the slaughter. Most owners are disengaged, many are ignorant of their rights and some are concerned about their future income from letting or service standards if they vote against the incumbent or even just ask for a second opinion on the request that has been made of them.

The ethics of the situation are clear to most fair-minded people and me. Ask for the extension by all means but be big enough to say to those who pay your salary that they should get their own advice about what you are putting to them. In the corporate world one would be shot for not doing so – why is it so different in the body corporate world?

 

Let my people go

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And Moses went in unto Pharaoh and said, ‘Let my people go’, and so political lobbying has been around for some time.

I wish these words were mine but they’re from the program for the Melbourne Theatre Company’s production of Tony McNamara’s ‘The Grenade’ currently showing in Sydney.

The play, about a lobbyist losing his grip on his family situation really has nothing to do with lobbying at all but as is the way with esoteric programs for such productions, the pre-performance reading material tells us something about an industry we may never have otherwise thought about.

Apparently, in Canberra alone, there are about 150 pressure groups, public relations outfits and specialized consultants keeping permanent offices and employing about a thousand specialists and turning over a billion dollars a year in fee and expenses.

This week I will throw my hat into that ring and head to the Nations capital to lobby for the Owners Corporation Network on a review of laws relating to apartment living in the ACT. Canberra has taken to apartment living like ducks to Lake Burley Griffin and as always, the law makers are playing catch up to provide a range of laws that attempt to balance the rights of the individual with the rights of the common good in these strata communities.

From the vantage point of someone working in at least four different jurisdictions every day about strata laws (NSW, Qld, Vic and ACT), I have to ask the obvious question. ‘Why in this country does each state and territory have to ‘do our own thing?’

Is the plight of people living with children, animals, and leaks and parking problems any different in Dickson than it is in Hornsby or Geelong? I can tell you from first hand experience that its not, yet we have eight different sets of laws about the same human condition, each with their own language and political hierarchy and special interest groups.

Imagine if we could combine the best of each set of laws and work under a common language so that owners of an apartment in Sydney who also own a holiday apartment in Queensland were a little less confused when it came to participating in the affairs of the body corporate. We could draw from the one pool of judicial determinations about different points and perhaps fight a little less. The money we saved on replicating services and re-inventing wheels could go to unit owner education.

Sound like a good idea? Then, we had better start lobbying.

Beautiful One Day Debating the Next

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It’s been another tough couple of weeks for the Qld management rights operators.

A large mixed residential and holiday letting townhouse complex on the Gold Coast knocked back a grab for a new 25-year caretaking and letting contract. The mega tower Q1 withdrew its termination notice at its AGM on Monday but only after coming to a confidential agreement with the manager after mediation.

The case for and against management was hard fought in both bodies corporate and in both cases those opposed to management narrowly carried the day. There was a lot of intense lobbying and by the look of the Qld governments legislative reform agenda there is a lot more lobbying about management rights ahead.

The Qld government has confirmed it is undertaking a review of the laws about long-term management rights.   The anti management rights lobby want three year terms to replace the current laws allowing up to 25 years in some cases.

As the debates rages both in the upper echelons of government and at the coalface at increasingly complex and acrimonious body corporate meetings, both sides would do well to take head of the sage words of Lobbyist Peter Cullen quoted by John Warhurst in ‘Behind Closed Doors; politics, scandals and the lobbying industry’ (2007 ) University of New South Wales Press –

‘…if you want a favorable decision you must couch your arguments to appeal to those you are trying to persuade. Far too many interest groups lobby on the basis of what is good for them without in any way trying to demonstrate that what is good for them is also in the public interest’

In this round of debate about the future of management rights the unit owners will be arguing that public interest is not served by security of tenure for an industry that’s not performing for those it’s meant to serve. In the 2010 summer newsletter of the Unit Owners Association (Qld) Garry Maynard writes of his own experience where two holiday letting unit are returning less than 1.5% net on prices he paid six years ago. He quotes another case in far north Queensland with this sad history –

1993 2008
Body corporate levies $1 800 $4 500
Council rates $1 000 $2 600
Income $ 10 140 $11 673

The proponents of management rights will need to show how they will drive up income to keep pace with expenses. In a system that pays managers on the gross room rate not the net profit to investors, this is unlikely to happen.

Those opposed to long term lock-in contracts for caretaking and letting will need to show that the alternative systems of employed managers and off-site letting will not result in anarchy. They will point to Victoria where towers are managed by building managers employed by the owners’ corporation and offsite real estate agents arrange letting. Melbourne seems to be doing fairly well under this system. The Melbourne property market is surprising everyone. New York and Europe operate without lock-in contracts for managers and building there don’t seem to be falling down either.

If the debate is about public interest and not vested interests the management rights lobby is going to need some hard numbers to win and they just don’t seem to be available.

 

Ms Moore Must Try Harder

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The NSW Parliament on strata law reform in 2011 – Final report card.

‘Tis the season to be jolly, and for those of us with children, to try our hardest to make sense of those horribly obtuse report cards the little angels bring home. I love the grade, “Developing” – ever hopeful, it leaves us with a feeling that maybe we should pay the school fees again next year, because who knows?

Anyway, for those without school-aged children, to share the pain, here is my report card on the New South Wales Parliaments 2010 strata law reform efforts. The year was punctuated primarily by some new regulations on 1 September 2010 and the introduction of a private members bill on the last sitting day of the year and, mercifully, this parliament.

 

Proposal to prohibit developers having an ongoing role in strata and building management High The Lord Mayor and Independent Member for Sydney, Clover Moore MP has an excellent knowledge and understanding of this rort by which developers suffocate the independent workings of the new owners until well after the expiration of the sales campaign for the unsold units and the expiration of the time frames for taking action on building defects. The proposal is bound to ensure developers step up their donations to any political party promising upon re-election in March 2011 to scrap this proposal.
Regulation introducing new by laws about hanging washing on any part of a lot not visible form street level. Elementary  The Parliament has demonstrated here merely an elementary knowledge  of what really matters in high-rise living with this token nod to the greenies while pandering to the rednecks concerned that our home unit blocks will soon resemble a Singaporean slum in the 1930’s on washing day.
Proposal to increase CTTT fines tenfold and allow costs to be awarded in equitable circumstances Excellent  The Lord Mayors private members bill has achieved a very high level here by giving this important body some real teeth to punish wrongdoers and to compensate reasonable people dragged through an expensive process by the unhinged ‘Condo Commando’. If the bill had only proposed compulsory relocation to 5-acre housing estates for said CC’s, this proposal would surely have won the headmasters prize.
New regulations up-ing monetary restrictions on the need for two quotes for major expenditure and obtaining legal advice and tinkering with model by laws and proxy forms Developing  The Parliament has achieved only a limited sense of understanding about the things that matter in strata land and need real reform. The Parliament should apply itself next year to more challenging matters like the buildings that should be condemned in the Eastern suburbs because of chronic and persistent failure of owners and managers to properly fund sinking funds and attend to fire and life safety orders and the termination of strata schemes to assist the unfortunates in Ku-ring-gai who have bought into new buildings on the Pacific Highway that will date faster than a safari suit did in the 70’s and will happily be torn down by the owners themselves if only they had workable laws to enable them to do so.
Proposal to make owners and occupiers responsible for only 2 people per bedroom in a unit Confused / Bizarre  The role of strata management laws is to control the use of common property – the role of local government is to control the use of property. The private member should know this because she is also the Lord Mayor. This also discriminates against those with more exotic sexual preferences.

 

Teacher’s comments about application to the task of strata law reform this year

Ms Moore should not leave important tasks like strata reform laws to the last day of term. In fairness, some of her classmates may not have been playing nicely towards the end of the year causing her to be distracted in her work.

The state coalition opposition should develop a strong sense of opinion on some of these matters. The comments by the opposition fair-trading spokesman, Greg Aplin, to the Sydney Morning Herald on the private members bill were truly banal.

The NSW Labor party government should work towards developing any sense of opinion on these matters. Given that there are so many leaving the class this year, at this stage a highly developed opinion on anything would be a bridge too far. Their website and the internet is bereft of their comments on any of these matters leaving no inclination on how they might vote on these proposals when parliament resumes next year. Increasingly however, it seems no one cares.

Days Absent – too many or not enough, depending on your view?

 

The Prophecies Of Stratadamus

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The Prophecies of Stratadamus -2011
Startadamus is the lesser-known cousin of the French medico, Michel de Nostredame who lived in the 1500’s and predicted the future. Unlike his cousin, until now his predictions of the way people will live in communities in close proximity to each other in 2011 have received little media attention. But in my last blog for 2010, it is my unique privilege to unveil what the Great One predicted for 2011 all those years ago. He said –

  • Michael Teys will release his first book on 1 July 2011. It will be an expose about what’s wrong with strata and how simple it is to make things better, not by the never ending pursuit of perfect laws, but rather by adopting some commonly understood and accepted business principles and standards like governance, compliance and sustainability. He added that if Teys did not make this deadline public, then the book would never get finished, and so this announcement has come to pass.
  • Clover Moore’s private members bill for new strata laws for NSW, while containing some thoughtful initiatives will not be made law. Instead, the one who calls himself O’Farrell will rise to power and the bill will be lost in committee while a new Minister comes up to speed and proposes his or her own new laws much in the same way a cat or dog marks there own territory.
  • In the Nations capital, Canberra, where all new high rise buildings leak and are crack there will be ongoing reviews of building certification practices running parallel with a review of strata management laws. Legislation on the latter will be tabled in parliament before the New Years end but the building standards laws are more complicated and will take longer to materialize.
  • Management rights in Queensland will have a tough year as property prices continue to fall in that part of the world and owners turns their focus to the levies they are paying – on site caretakers will be the biggest item on the budget and owners will be looking for cuts and better value for money. This will coincide with another government review of the industry. The end of this industry has been predicated before by others with less credibility that Stratadamus. The Great One says that an unpopular Queensland government will choke on this reform but the nervousness of the banks and a more informed strata market will see values fall and there will be more contracts with bodies corporate allowed to expire without renewed terms for managers.
  • The oversupplied Gold Coast unit market will see off the plan purchasers’ looking for any excuse not to settle on units they bought at the top of the market and worth much less as they near completion. This happens every time the Gold Coast market overheats but this time there are much more detailed laws on the disclosure required of developers and managers. These laws have not been taken seriously on the Gold Coast and purchasers will be freed as a result.

And in his last prophecy for 2011, Startadamus says Teys Lawyers will deliver a cracker program of strata training comprising three live breakfast seminars peppered with monthly webinars, for Staradamus was able to foresee that the overcrowding of Sydney would be such that people would no longer wish to leave their office so often for training and a thing called the internet would make it possible for first class presentations to be delivered to individuals at home or in the office no matter where in the country they were located.

Go to www.teyslawyers.com.au to enrol in the 2011 training programs.

 

Strata Theres an app coming for that

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It must be true that the Internet is starting to change the way people shop; Gerry Harvey and his mates from the big end of retail are starting to whine about poor holiday season trading and are about to launch a major advertising campaign to have GST applied to overseas purchases made on the net.

Harvey normally gets what he wants but I cant help but think this campaign is a little too late and in any event a bit futile. The high aussie dollar has no doubt helped the trend to shopping on the net but there’s more to it than that -convenience and not having to deal with inane banter from shop assistants who really couldn’t care less, appeals to me. This Internet thing seems here to stay and retail therapy is just another thing to be had on line.

It made me wonder over the Christmas break how much longer it will be before strata management too gets a rude awakening from a true net based strata service provider? I’m not talking web access to download the latest minutes and financials or to log your change of address details. I’m talking full service strata management online with a Facebook type interface that connects the owners and service providers in a strata community in a way that is tailored to the real needs of the owners and occupiers; ‘How do I apply for pet approval?’, ‘How do I get approval for renovations?,’ ‘Where can I learn on line about the history of this complex ?‘, ‘What are our levies spent on?’, ‘ What is the policy on collecting late payment ? ‘ What do others think about taking action against our builder to fix the leaks and cracks?’ ‘Does anyone know a good baby sitter in this area?’

The attempts to date to use the net for strata management have focused on one-way information download. The handbrake has been the cost of labor to populate the site. Facebook apparently started as a way for students to make contact with each other at college. Maybe the strata equivalent will grow out of something as basic as this that is not presently being addressed by strata managers?

When will common property include cars and bikes

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The latest academic study relevant to unit development finds it is not necessary to intensify land-use across Sydney before significant improvement in both patronage and economic efficiency becomes possible.

(SMH Wednesday, 5 January 2011, ‘Units not crucial for good public transport, study finds’). I bet the poor suffering commuters of Sydney were relieved to read this, as they waited for yet another late and over crowded bus or train to take them back to work after their holiday break.

While units may not be crucial for good public transport, as the study finds, I would argue the converse must be true; public transport is crucial for good unit development.

Alternatives to oil based mobility including local walkways and bikeways become more likely if a unit development is located on a well-serviced public transport line so people might live without a car at all.

The pick up and go car hire services operating in Pyrmont, the ones where you get an SMS code to access a hire car left in a dedicated roadside parking space near your building by the last user and take it for a couple of hours are making it just that little bit easier not to own a car at all. The same concept for urban bike hire is operating in Brisbane and allows you to hire a take a bike from one part of the CBD and drop it at the other end when you are done.

These different types of easy access and affordable forms of local transportation will appeal to unit dwellers choosing unit accommodation for environmental and financial reasons. These modern unit dwellers would rather have more parking options for shared cars and bikes on their common property than double bays for cars they don’t want to own, but only if the public transport network around them can get them to and from work with reasonable ease and comfort each day.

 

Soggy Bodies Corporate

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While the media is full of truly uplifting stories about people helping others they don’t know I recall a story of a different kind told by my father in the wake of the 1974 Brisbane floods. He and some mates from his local service club delivered a new 12 cubic foot fridge to a flood victim who complained at the time of delivery that the one they had lost had a larger capacity of 14 cubic feet.

The ungratefulness of the victim tested my Dad’s community spirit but when his disappointment subsided he of course came to the view that the outpouring of goodwill made the odd instance of bad manners insignificant.

Just as the community at large tends to emerge from such disasters stronger for enduring the pain collectively, the challenge of repairing common property and planning for a better future provides the same opportunity for bodies corporate and owners corporations. Funding these repairs, often without the existence of flood insurance will be difficult for all, particularly those groups who have skimped on their past responsibilities for saving progressively for the repairs and maintenance. Special levies will need to be struck and perhaps loans taken out by bodies corporate to ease the cash flow crisis for members.

The financial management of bodies corporate in Queensland will be difficult for years ahead as a consequence of these events. Proper budgeting, thoughtful placement of insurance, timely collection of levies and the provision of discounts for early payers and interest for late payers will all require careful and considered attention to ensure bodies corporate emerge from this disaster paying proper regard to their ongoing responsibilities for maintaining property values, satisfying legislative expectations about health and safety and fostering a harmonious living environment.

On top of these obligations, those bodies corporate in Brisbane unable to obtain insurance protection against future floods will need to consider an annual contingency for future flood damage. In a town that is built on a river likely to flood like this every thirty or forty years, the risk is foreseeable and the duty to manage this risk is very real.

 

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